A BILL to amend and reenact §11-15B-2, §11-15B-2a, §11-15B-24, §11-15B-25, §11-15B-26, §11-15B-30, §11-15B-32, §11-15B-33 and
§11-15B-34 of the Code of West Virginia, 1931, as amended, all
relating to the administration of sales and use tax generally;
adding new definitions; clarifying present definitions;
incorporating changes to the Streamlined Sales and Use Tax
Agreement; adding a “computer software maintenance contract”
as a Streamlined Sales and Use Tax Agreement defined term;
relieving seller of tax liability in certain instances;
clarifying due dates that fall on weekends and legal holidays;
eliminating monetary allowance for certain sellers; providing
new effective dates; and clarifying state administration of
state and local sales and use taxes, bases and exceptions.

Be it enacted by the Legislature of West Virginia:

That §11-15B-2, §11-15B-2a, §11-15B-24, §11-15B-25, §11-15B-26, §11-15B-30, §11-15B-32, §11-15B-33 and §11-15B-34 of the Code
of West Virginia, 1931, as amended, be amended and reenacted, all
to read as follows:

ARTICLE 15B. SALES AND USE TAX ADMINISTRATION.

§11-15B-2. Definitions.

(a) General. -- When used in this article and articles fifteen
and fifteen-a of this chapter, words defined in subsection (b) of
this section shall have the meanings ascribed to them in this
section, except where a different meaning is distinctly expressed
or the context in which the term is used clearly indicates that a
different meaning is intended by the Legislature.

(b) Terms defined. --

(1) "Agent" means a person appointed by a seller to represent
the seller before the member states.

(2) "Agreement" means the Streamlined Sales and Use Tax
Agreement as defined in section two-a of this article.

(3) "Alcoholic beverages" means beverages that are suitable
for human consumption and contain one half of one percent or more
of alcohol by volume.

(4) "Bundled transaction" means the retail sale of two or more
products, except real property and services to real property,
where: (i) The products are otherwise distinct and identifiable;
and (ii) the products are sold for one nonitemized price. A
"bundled transaction" does not include the sale of any products in
which the sales price varies, or is negotiable, based on the
selection by the purchaser of the products included in the
transaction.

(A) "Distinct and identifiable products" does not include:

(i) Packaging such as containers, boxes, sacks, bags and
bottles or other materials such as wrapping, labels, tags and
instruction guides that accompany the retail sale of the products
and are incidental or immaterial to the retail sale thereof.
Examples of packaging that are incidental or immaterial include
grocery sacks, shoe boxes, dry cleaning garment bags and express
delivery envelopes and boxes;

(ii) A product provided free of charge with the required
purchase of another product. A product is "provided free of charge"
if the sales price of the product purchased does not vary depending
on the inclusion of the product provided free of charge; or

(iii) Items included in the member state's definition of
"sales price" as defined in this section.

(B) The term "one nonitemized price" does not include a price
that is separately identified by product on binding sales or other
supporting sales-related documentation made available to the
customer in paper or electronic form including, but not limited to,
an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card
or price list.

(C) A transaction that otherwise meets the definition of a
"bundled transaction", as defined in this subdivision, is not a
"bundled transaction" if it is:

(i) The retail sale of tangible personal property and a
service where the tangible personal property is essential to the
use of the service and is provided exclusively in connection with
the service and the true object of the transaction is the service;
or

(ii) The retail sale of services where one service is provided
that is essential to the use or receipt of a second service and the
first service is provided exclusively in connection with the second
service and the true object of the transaction is the second
service; or

(iii) A transaction that includes taxable products and
nontaxable products and the purchase price or sales price of the
taxable products is de minimis;

(I) "De minimis" means the seller's purchase price or sales
price of the taxable products is ten percent or less of the total
purchase price or sales price of the bundled products;

(II) Sellers shall use either the purchase price or the sales
price of the products to determine if the taxable products are de
minimis. Sellers may not use a combination of the purchase price
and sales price of the products to determine if the taxable
products are de minimis;

(III) Sellers shall use the full term of a service contract to
determine if the taxable products are de minimis; or

(iv) A transaction that includes products taxable at the
general rate of tax and food or food ingredients taxable at a lower
rate of tax and the purchase price or sales price of the products
taxable at the general sales tax rate is de minimis. For purposes
of this subparagraph, the term "de minimis" has the same meaning as
ascribed to it under subparagraph (iii) of this paragraph;

(v) The retail sale of exempt tangible personal property, or
food and food ingredients taxable at a lower rate of tax, and
tangible personal property taxable at the general rate of tax
where:

(I) The transaction includes "food and food ingredients",
"drugs", "durable medical equipment", "mobility-enhancing
equipment", "over-the-counter drugs", "prosthetic devices" or
"medical supplies", all as defined in this article; and

(II) Where the seller's purchase price or sales price of the
taxable tangible personal property taxable at the general rate of
tax is fifty percent or less of the total purchase price or sales
price of the bundled tangible personal property. Sellers may not
use a combination of the purchase price and sales price of the
tangible personal property when making the fifty percent
determination for a transaction.

(5) "Candy" means a preparation of sugar, honey or other
natural or artificial sweeteners in combination with chocolate,
fruits, nuts or other ingredients or flavorings in the form of
bars, drops or pieces. "Candy" shall not include any preparation
containing flour and shall require no refrigeration.

(6) "Clothing" means all human wearing apparel suitable for
general use. The following list contains examples and is not
intended to be an all-inclusive list.

(v) Sewing materials that become part of clothing including,
but not limited to, buttons, fabric, lace, thread, yarn and
zippers.

(7) "Clothing accessories or equipment" means incidental items
worn on the person or in conjunction with clothing. "Clothing
accessories or equipment" are mutually exclusive of and may be
taxed differently than apparel within the definition of "clothing",
"sport or recreational equipment" and "protective equipment". The
following list contains examples and is not intended to be an all-inclusive list. "Clothing accessories or equipment" shall include:

(8)"Certified automated system" or "CAS" means software
certified under the agreement to calculate the tax imposed by each
jurisdiction on a transaction, determine the amount of tax to remit
to the appropriate state and maintain a record of the transaction.

(9) "Certified service provider" or "CSP" means an agent
certified under the agreement to perform all of the seller's sales
and use tax functions other than the seller's obligation to remit
tax on its own purchases.

(10) "Computer" means an electronic device that accepts
information in digital or similar form and manipulates the
information for a result based on a sequence of instructions.

(11) "Computer software" means a set of coded instructions
designed to cause a computer or automatic data processing equipment
to perform a task.

(12) “Computer software maintenance contract” means a contract
that obligates a vendor of computer software, or other person, to
provide a customer with future updates or upgrades to computer
software, support services with respect to computer software or
both. The term “computer software maintenance contract” includes
contracts sold by a person other than the vendor of the computer
software to which the contract relates.

(A) A “mandatory computer software maintenance contract” is a
computer software maintenance contract that the customer is
obligated by contract to purchase as a condition to the retail sale
of computer software.

(B) An “optional computer maintenance contract” is a computer
software maintenance contract that a customer is not obligated to
purchase as a condition to the retail sale of computer software.

(13) "Delivered electronically" means delivered to the
purchaser by means other than tangible storage media.

(12)(14) "Delivery charges" means charges by the seller of
personal property or services for preparation and delivery to a
location designated by the purchaser of personal property or
services including, but not limited to, transportation, shipping,
postage, handling, crating and packing.

(13)(15) "Dietary supplement" means any product, other than
tobacco, intended to supplement the diet that:

(A) Contains one or more of the following dietary ingredients:

(i) A vitamin;

(ii) A mineral;

(iii) An herb or other botanical;

(iv) An amino acid;

(v) A dietary substance for use by humans to supplement the
diet by increasing the total dietary intake; or

(vi) A concentrate, metabolite, constituent, extract or
combination of any ingredient described in subparagraph (i) through
(v), inclusive, of this paragraph;

(B) And is intended for ingestion in tablet, capsule, powder,
softgel, gelcap or liquid form, or if not intended for ingestion in
such a form, is not represented as conventional food and is not
represented for use as a sole item of a meal or of the diet; and

(C) Is required to be labeled as a dietary supplement,
identifiable by the "Supplemental Facts" box found on the label as
required pursuant to 21 CFR § 101.36 or in any successor section of
the Code of Federal Regulations.

(14)(16) "Direct mail" means printed material delivered or
distributed by United States mail or other delivery service to a
mass audience or to addressees on a mailing list provided by the
purchaser or at the direction of the purchaser when the cost of the
items are not billed directly to the recipients. "Direct mail"
includes tangible personal property supplied directly or indirectly
by the purchaser to the direct mail seller for inclusion in the
package containing the printed material. "Direct mail" does not
include multiple items of printed material delivered to a single
address.

(15)(17) "Drug" means a compound, substance or preparation,
and any component of a compound, substance or preparation, other
than food and food ingredients, dietary supplements or alcoholic
beverages:

(A) Recognized in the official United States Pharmacopoeia,
official Homeopathic Pharmacopoeia of the United States or official
National Formulary, and supplement to any of them;

(B) Intended for use in the diagnosis, cure, mitigation,
treatment or prevention of disease; or

(C) Intended to affect the structure or any function of the
body. The amendment to this subdivision enacted during the 2009
regular legislative session shall apply to sales made after July 1,
2009.

(16)(18) "Durable medical equipment" means equipment,
including repair and replacement parts for the equipment, but does
not include mobility-enhancing equipment, which:

(A) Can withstand repeated use;

(B) Is primarily and customarily used to serve a medical
purpose;

(C) Generally is not useful to a person in the absence of
illness or injury; and

(18)(20) "Eligible property" means an item of a type, such as
clothing, that qualifies for a sales tax holiday exemption in this
state.

(19)(21) "Energy Star qualified product" means a product that
meets the energy efficient guidelines set by the United States
Environmental Protection Agency and the United States Department of
Energy that are authorized to carry the Energy Star label. Covered
products are those listed at www.energystar.gov or successor
address.

(20)(22) "Entity-based exemption" means an exemption based on
who purchases the product or service or who sells the product or
service. An exemption that is available to all individuals shall
not be considered an entity-based exemption.

(21)(23) "Food and food ingredients" means substances,
whether in liquid, concentrated, solid, frozen, dried or dehydrated
form, that are sold for ingestion or chewing by humans and are
consumed for their taste or nutritional value. "Food and food
ingredients" does not include alcoholic beverages, prepared food or
tobacco.

(22)(24) "Food sold through vending machines" means food
dispensed from a machine or other mechanical device that accepts
payment.

(23)(25)"Fur clothing" means clothing that is required to be
labeled as a fur product under the Federal Fur Products Labeling
Act (15 U. S. C. §69) and the value of the fur components in the
product is more than three times the value of the next most
valuable tangible component. "Fur clothing" is human-wearing
apparel suitable for general use but may be taxed differently from
clothing. For the purposes of the definition of "fur clothing", the
term "fur" means any animal skin or part thereof with hair, fleece
or fur fibers attached thereto, either in its raw or processed
state, but shall not include such skins that have been converted
into leather or suede, or which in processing the hair, fleece or
fur fiber has been completely removed.

(24)(26) "Governing board" means the governing board of the
Streamlined Sales and Use Tax Agreement.

(26)(28) "Includes" and "including" when used in a definition
contained in this article is not considered to exclude other things
otherwise within the meaning of the term being defined.

(27)(29) "Layaway sale" means a transaction in which property
is set aside for future delivery to a customer who makes a deposit,
agrees to pay the balance of the purchase price over a period of
time and, at the end of the payment period, receives the property.
An order is accepted for layaway by the seller when the seller
removes the property from normal inventory or clearly identifies
the property as sold to the purchaser.

(28)(30) "Lease" includes rental, hire and license. "Lease"
means any transfer of possession or control of tangible personal
property for a fixed or indeterminate term for consideration. A
lease or rental may include future options to purchase or extend.

(A) "Lease" does not include:

(i) A transfer of possession or control of property under a
security agreement or deferred payment plan that requires the
transfer of title upon completion of the required payments;

(ii) A transfer or possession or control of property under an
agreement that requires the transfer of title upon completion of
required payments and payment of an option price does not exceed
the greater of $100 or one percent of the total required payments;
or

(iii) Providing tangible personal property along with an
operator for a fixed or indeterminate period of time. A condition
of this exclusion is that the operator is necessary for the
equipment to perform as designed. For the purpose of this
subparagraph, an operator must do more than maintain, inspect or
set up the tangible personal property.

(iv) "Lease" or "rental" includes agreements covering motor
vehicles and trailers where the amount of consideration may be
increased or decreased by reference to the amount realized upon
sale or disposition of the property as defined in 26 U. S. C.
§7701(h)(1).

(B) This definition shall be used for sales and use tax
purposes regardless if a transaction is characterized as a lease or
rental under generally accepted accounting principles, the Internal
Revenue Code, the Uniform Commercial Code or other provisions of
federal, state or local law.

(29)(31) "Load and leave" means delivery to the purchaser by
use of a tangible storage media where the tangible storage media is
not physically transferred to the purchaser.

(30)(32) "Mobility-enhancing equipment" means equipment,
including repair and replacement parts to the equipment, but does
not include "durable medical equipment", which:

(A) Is primarily and customarily used to provide or increase
the ability to move from one place to another and which is
appropriate for use either in a home or a motor vehicle;

(B) Is not generally used by persons with normal mobility; and

(C) Does not include any motor vehicle or equipment on a motor
vehicle normally provided by a motor vehicle manufacturer.

(31)(33) "Model I seller" means a seller registered under the
Streamlined Sales and Use Tax Agreement that has selected a
certified service provider as its agent to perform all the seller's
sales and use tax functions, other than the seller's obligation to
remit tax on its own purchases.

(32)(34) "Model II seller" means a seller registered under
the Streamlined Sales and Use Tax Agreement that has selected a
certified automated system to perform part of its sales and use tax
functions, but retains responsibility for remitting the tax.

(33)(35) "Model III seller" means a seller registered under
the Streamlined Sales and Use Tax Agreement that has sales in at
least five member states, has total annual sales revenue of at
least $500 million, has a proprietary system that calculates the
amount of tax due each jurisdiction and has entered into a
performance agreement with the member states that establishes a tax
performance standard for the seller. As used in this definition, a
seller includes an affiliated group of sellers using the same
proprietary system.

(36) "Model IV seller" means a seller registered under the
Streamlined Sales and Use Tax Agreement and is not a Model I
seller, a Model II seller or a Model III seller.

(36)(37) "Over-the-counter drug" means a drug that contains
a label that identifies the product as a drug as required by 21 CFR
§201.66. The "over-the-counter drug" label includes:

(A) A drug facts panel; or

(B) A statement of the active ingredient(s) with a list of
those ingredients contained in the compound, substance or
preparation.

(A) Compensated by the payment of wages in the ordinary course
of employment; and

(B) Rendered to the person of an individual without, at the
same time, selling tangible personal property, such as nursing,
barbering, manicuring and similar services.

(39)(40) (A) "Prepared food" means:

(i) Food sold in a heated state or heated by the seller;

(ii) Two or more food ingredients mixed or combined by the
seller for sale as a single item; or

(iii) Food sold with eating utensils provided by the seller,
including plates, knives, forks, spoons, glasses, cups, napkins or
straws. A plate does not include a container or packaging used to
transport the food.

(B) "Prepared food" in subparagraph (ii), paragraph (A) of
this subdivision does not include food that is only cut, repackaged
or pasteurized by the seller, and eggs, fish, meat, poultry and
foods containing these raw animal foods requiring cooking by the
consumer as recommended by the Food and Drug Administration in
Chapter 3, Part 401.11 of its Food Code of 2001 so as to prevent
food-borne illnesses.

(C) Additionally, "prepared food" as defined in this
subdivision does not include:

(40)(41) "Prescription" means an order, formula or recipe
issued in any form of oral, written, electronic or other means of
transmission by a duly licensed practitioner authorized by the laws
of this state to issue prescriptions.

(41)(42) "Prewritten computer software" means computer
software, including prewritten upgrades, which is not designed and
developed by the author or other creator to the specifications of
a specific purchaser.

(A) The combining of two or more prewritten computer software
programs or prewritten portions thereof does not cause the
combination to be other than prewritten computer software.

(B) "Prewritten computer software" includes software designed
and developed by the author or other creator to the specifications
of a specific purchaser when it is sold to a person other than the
specific purchaser. Where a person modifies or enhances computer
software of which the person is not the author or creator, the
person is considered to be the author or creator only of the
person's modifications or enhancements.

(C) "Prewritten computer software" or a prewritten portion
thereof that is modified or enhanced to any degree, where the
modification or enhancement is designed and developed to the
specifications of a specific purchaser, remains prewritten computer
software. However, where there is a reasonable, separately stated
charge or an invoice or other statement of the price given to the
purchaser for the modification or enhancement, the modification or
enhancement does not constitute prewritten computer software.

(42)(43) "Product-based exemption" means an exemption based
on the description of the product or service and not based on who
purchases the product or service or how the purchaser intends to
use the product or service.

(43)(44) "Prosthetic device" means a replacement, corrective
or supportive device, including repair and replacement parts for
the device worn on or in the body, to:

(A) Artificially replace a missing portion of the body;

(B) Prevent or correct physical deformity or malfunction of
the body; or

(C) Support a weak or deformed portion of the body.

(44)(45) "Protective equipment" means items for human wear
and designed as protection of the wearer against injury or disease
or as protections against damage or injury of other persons or
property but not suitable for general use.

(45)(46) "Purchase price" means the measure subject to the
tax imposed by article fifteen or fifteen-a of this chapter and has
the same meaning as sales price.

(46)(47) "Purchaser" means a person to whom a sale of
personal property is made or to whom a service is furnished.

(47)(48) "Retail sale" or "sale at retail" means:

(A) Any sale, lease or rental for any purpose other than for
resale as tangible personal property, sublease or subrent; and

(B) Any sale of a service other than a service purchased for
resale.

(48)(49) (A) "Sales price" means the measure subject to the
tax levied under article fifteen or fifteen-a of this chapter and
includes the total amount of consideration, including cash, credit,
property and services, for which personal property or services are
sold, leased or rented, valued in money, whether received in money
or otherwise, without any deduction for the following:

(i) The seller's cost of the property sold;

(ii) The cost of materials used, labor or service cost,
interest, losses, all costs of transportation to the seller, all
taxes imposed on the seller and any other expense of the seller;

(iii) Charges by the seller for any services necessary to
complete the sale, other than delivery and installation charges;

(iv) Delivery charges; and

(v) Installation charges.

(B) "Sales price" does not include:

(i) Discounts, including cash, term or coupons that are not
reimbursed by a third party that are allowed by a seller and taken
by a purchaser on a sale;

(ii) Interest, financing and carrying charges from credit
extended on the sale of personal property, goods or services, if
the amount is separately stated on the invoice, bill of sale or
similar document given to the purchaser; or

(iii) Any taxes legally imposed directly on the consumer that
are separately stated on the invoice, bill of sale or similar
document given to the purchaser.

(C) "Sales price" shall include consideration received by the
seller from third parties if:

(i) The seller actually receives consideration from a party
other than the purchaser and the consideration is directly related
to a price reduction or discount on the sale;

(ii) The seller has an obligation to pass the price reduction
or discount through to the purchaser;

(iii) The amount of the consideration attributable to the sale
is fixed and determinable by the seller at the time of the sale of
the item to the purchaser; and

(iv) One of the following criteria is met:

(I) The purchaser presents a coupon, certificate or other
documentation to the seller to claim a price reduction or discount
where the coupon, certificate or documentation is authorized,
distributed or granted by a third party with the understanding that
the third party will reimburse any seller to whom the coupon,
certificate or documentation is presented;

(II) The purchaser identifies himself or herself to the seller
as a member of a group or organization entitled to a price
reduction or discount (a preferred customer card that is available
to any patron does not constitute membership in such a group); or

(III) The price reduction or discount is identified as a
third-party price reduction or discount on the invoice received by
the purchaser or on a coupon, certificate or other documentation
presented by the purchaser.

(49)(50) "Sales tax" means the tax levied under article
fifteen of this chapter.

(50)(51) "School art supply" means an item commonly used by
a student in a course of study for artwork. The term is mutually
exclusive of the terms "school supply", "school instructional
material" and "school computer supply" and may be taxed
differently. The following is an all-inclusive list:

(A) Clay and glazes;

(B) Paints; acrylic, tempora and oil;

(C) Paintbrushes for artwork;

(D) Sketch and drawing pads; and

(E) Watercolors.

(51)(52) "School instructional material" means written
material commonly used by a student in a course of study as a
reference and to learn the subject being taught. The term is
mutually exclusive of the terms "school supply", "school art
supply" and "school computer supply" and may be taxed differently.
The following is an all-inclusive list:

(A) Reference books;

(B) Reference maps and globes;

(C) Textbooks; and

(D) Workbooks.

(52)(53) "School computer supply" means an item commonly used
by a student in a course of study in which a computer is used. The
term is mutually exclusive of the terms "school supply", "school
art supply" and "school instructional material" and may be taxed
differently. The following is an all-inclusive list:

(53)(54) "School supply" means an item commonly used by a
student in a course of study. The term is mutually exclusive of the
terms "school art supply", "school instructional material" and
"school computer supply" and may be taxed differently. The
following is an all-inclusive list of school supplies:

(54)(55) "Seller" means any person making sales, leases or
rentals of personal property or services.

(55)(56) "Service" or "selected service" includes all
nonprofessional activities engaged in for other persons for a
consideration which involve the rendering of a service as
distinguished from the sale of tangible personal property, but does
not include contracting, personal services, services rendered by an
employee to his or her employer, any service rendered for resale or
any service furnished by a business that is subject to the control
of the Public Service Commission when the service or the manner in
which it is delivered is subject to regulation by the Public
Service Commission of this state. The term "service" or "selected
service" does not include payments received by a vendor of tangible
personal property as an incentive to sell a greater volume of such
tangible personal property under a manufacturer's, distributor's or
other third-party's marketing support program, sales incentive
program, cooperative advertising agreement or similar type of
program or agreement and these payments are not considered to be
payments for a service or selected service rendered, even though
the vendor may engage in attendant or ancillary activities
associated with the sales of tangible personal property as required
under the programs or agreements.

(56)(57) "Soft drink" means nonalcoholic beverages that
contain natural or artificial sweeteners. "Soft drinks" do not
include beverages that contain milk or milk products, soy, rice or
similar milk substitutes or greater than fifty percent of vegetable
or fruit juice by volume.

(57)(58) "Sport or recreational equipment" means items
designed for human use and worn in conjunction with an athletic or
recreational activity that are not suitable for general use. Sport
or recreational equipment are mutually exclusive of and may be
taxed differently than apparel within the definition of "clothing",
"clothing accessories or equipment" and "protective equipment". The
following list contains examples and is not intended to be an all-inclusive list. "Sport or recreational equipment" shall include:

(58)(59) "State" means any state of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.

(59)(60) "Tangible personal property" means personal property
that can be seen, weighed, measured, felt or touched or that is in
any manner perceptible to the senses. "Tangible personal property"
includes, but is not limited to, electricity, steam, water, gas and
prewritten computer software.

(60)(61) "Tax" includes all taxes levied under articles
fifteen and fifteen-a of this chapter and additions to tax,
interest and penalties levied under article ten of this chapter.

(61)(62) "Tax Commissioner" means the State Tax Commissioner
or his or her delegate. The term "delegate" in the phrase "or his
or her delegate", when used in reference to the Tax Commissioner,
means any officer or employee of the State Tax Division duly
authorized by the Tax Commissioner directly, or indirectly by one
or more redelegations of authority, to perform the functions
mentioned or described in this article or rules promulgated for
this article.

(62)(63) "Taxpayer" means any person liable for the taxes
levied by articles fifteen and fifteen-a of this chapter or any
additions to tax penalties imposed by article ten of this chapter.

(63)(64) "Telecommunications service" or "telecommunication
service" when used in this article and articles fifteen and
fifteen-a of this chapter shall have the same meaning as that term
is defined in section two-b of this article.

(64)(65) "Tobacco" means cigarettes, cigars, chewing or pipe
tobacco or any other item that contains tobacco.

(65)(66) "Use tax" means the tax levied under article
fifteen-a of this chapter.

(66)(67) "Use-based exemption" means an exemption based on a
specified use of the product or service by the purchaser.

(67)(68) "Vendor" means any person furnishing services taxed
by article fifteen or fifteen-a of this chapter or making sales of
tangible personal property or custom software. "Vendor" and
"seller" are used interchangeably in this article and in articles
fifteen and fifteen-a of this chapter.

(c) Additional definitions. --

Other terms used in this article are defined in articles
fifteen and fifteen-a of this chapter, which definitions are
incorporated by reference into this article. Additionally, other
sections of this article may define terms primarily used in the
section in which the term is defined.

§11-15B-2a. Streamlined Sales and Use Tax Agreement defined.As used in this article and articles fifteen and fifteen-a of
this chapter, the term "Streamlined Sales and Use Tax Agreement" or
"agreement" means the agreement adopted November 12, 2002, by
states that enacted authority to engage in multistate discussions
similar to that provided in section four of this article, except
when the context in which the term is used clearly indicates that
a different meaning is intended by the Legislature. "Agreement"
includes amendments to the agreement adopted by the implementing
states in calendar years 2003, 2004, 2005, 2006, 2007, 2008, 2009,
2010, 2011 and amendments adopted by the governing board on or
before, January 31, 20102012, but does not include any substantive
changes in the agreement adopted after January 31, 20102012.

§11-15B-24. Administration of exemptions.

(a) General rules.--

When a purchaser claims an exemption from paying tax under

article fifteen or fifteen-a of this chapter:

(1) Sellers shall obtain identifying information of the
purchaser and the reason for claiming a tax exemption at the time
of the purchase, as determined by the governing board.

(2) A purchaser is not required to provide a signature to
claim an exemption from tax unless a paper exemption certificate is
used.

(3) The seller shall use the standard form for claiming an
exemption electronically that is adopted by the governing board.

(4) The seller shall obtain the same information for proof of
a claimed exemption regardless of the medium in which the
transaction occurred.

(5) The Tax Commissioner may utilize a system wherein the
purchaser exempt from the payment of the tax is issued an
identification number that is presented to the seller at the time
of the sale.

(6) The seller shall maintain proper records of exempt
transactions and provide the records to the Tax Commissioner or the
Tax Commissioner's designee.

(7) The Tax Commissioner shall administer use-based and
entity-based exemptions when practicable through a direct pay
permit, an exemption certificate or another means that does not
burden sellers.

(8) After December 31, 2007, inIn the case of drop shipments,
a third-party vendor such as a drop shipper may claim a resale
exemption based on an exemption certificate provided by its
customer/reseller or any other acceptable information available to
the third-party vendor evidencing qualification for a resale
exemption, regardless of whether the customer/reseller is
registered to collect and remit sales and use taxes in this state,
when the sale is sourced to this state.

(b) The Tax Commissioner shall relieve sellers that follow the
requirements of this section from the tax otherwise applicable if
it is determined that the purchaser improperly claimed an exemption
and shall hold the purchaser liable for the nonpayment of tax. This
relief from liability does not apply:

(A) To a seller who fraudulently fails to collect the tax;

(B) To a seller who solicits purchasers to participate in the
unlawful claim of an exemption;

(C) To a seller who accepts an exemption certificate when the
purchaser claims an entity-based exemption when: (i) The subject of
the transaction sought to be covered by the exemption certificate
is actually received by the purchaser at a location operated by the
seller; and (ii) the state in which that location resides provides
an exemption certificate that clearly and affirmatively indicates
(graying out exemption reason types on uniform form and posting it
on a state's website is an indicator) that the claimed exemption is
not available in that state.

(c) Time within which seller must obtain exemption
certificates.--

A seller is relieved from paying tax otherwise applicable
under article fifteen or fifteen-a of this chapter if the seller
obtains a fully completed exemption certificate or captures the
required data elements within ninety days subsequent to the date of
sale.

(d)(1) If the seller has not obtained an exemption
certificate or all required data elements, the seller mayshall,
within one hundred twenty days subsequent to a request for
substantiation by the Tax Commissioner, either prove that the
transaction was not subject to tax by other means or obtain a fully
completed exemption certificate from the purchaser, taken in good
faith which means that the seller obtain a certificate that claims
an exemption that: (i) Was statutorily available on the date of the
transaction in the jurisdiction where the transaction is sourced;
(ii) could be applicable to the item being purchased; and (iii) is
reasonable for the purchaser's type of business; or obtain other
information establishing that the transaction was not subject to
the tax.For purposes of this section, the Tax Commissioner may
continue to apply this state's standards of good faith until a
uniform standard for good faith is defined in the Streamlined Sales
and Use Tax Agreement.

(2) If the seller obtains the information described in
subdivision (1) of this subsection, the seller shall be relieved of
any liability for the tax on the transaction unless it is
discovered through the audit process that the seller had knowledge
or had reason to know at the time such information was provided
that the information relating to the exemption claimed was
materially false or the seller otherwise knowingly participated in
activity intended to purposefully evade the tax that is properly
due on the transaction.

(2)(e) Nothing in this section shall affect the ability of
the Tax Commissioner to require purchasers to update exemption
certificate information or to reapply with the state to claim
certain exemptions.

(3)(f)Notwithstanding the preceding provisions of this
section, when an exemption may be claimed by exemption certificate,
A seller is relieved from paying the tax otherwise applicable if
the seller obtains a blanket exemption certificate from a purchaser
with which the seller has a recurring business relationship. TheNotwithstanding the provisions of subsection (e) of this section,
the Tax Commissioner may not request from the seller renewal of
blanket certificates or updates of exemption certificate
information or data elements when there is a recurring business
relationship between the buyer and seller. For purposes of this
subdivision, a recurring business relationship exists when a period
of no more than twelve months elapses between sales transactions.

(d)(g)Exception.--

No exemption certificate or direct pay permit number is
required when the sale is exempt per se from the taxes imposed by
articles fifteen and fifteen-a of this chapter.

§11-15B-25. Uniform tax returns.

(a) General.--

A seller who registers with this state is required to file a
single sales and use tax return with the Tax Commissioner for each
taxing period.

(b) Due date of return.--

(1) This return shall be due on the twentieth day of the month
following the month in which the transaction subject to tax
occurred.

(2) When the due date for a return falls on a Saturday or
Sunday or legal holiday, the return shall be due on the next
succeeding business day. If the return is filed in conjunction
with a remittance and the remittance cannot be made pursuant to
subdivision (e), section twenty-six of this article, the return
shall be accepted as timely on the same day as the remittance under
that subdivision.

(c) Additional information returns.--

The Tax Commissioner shall make available to all sellers,
except sellers of products qualifying for exclusion from the
provisions of the agreement, a simplified return that is filed
electronically.

(d) The Tax Commissioner may not require a seller which has
indicated at the time of registration that it anticipates making no
sales which would be sourced to this state to file a return, except
that the seller shall lose the exemption upon making any taxable
sales into this state and shall file a return in the month
following any sale.

(e) After January 1, 2010, the Tax Commissioner shall give
notice to a seller, which has no legal requirement to register in
this state, of a failure to file a required return and a minimum of
thirty days to file thereafter prior to establishing a liability
amount for taxes based solely on the seller's failure to timely
file a return: Provided, That the Tax Commissioner may establish a
liability amount of taxes based solely on the seller's failure to
timely file a return if such seller has a history of nonfiling or
late filing.

(f) Nothing in this section shall prohibit the Tax
Commissioner from allowing additional return options or the filing
of returns less frequently.

§11-15B-26. Uniform rules for remittances of funds.

(a) General.--

Only one remittance is required for each return except as
provided in this section.

(b) When electronic remittance required.--

(1) All remittances from sellers under Models I, II and III
shall be remitted electronically after December 31, 2003.

(2) All remittances in payment of taxes reported on the
approved simplified return format shall be remitted electronically.

(c) Method of remittance.--

Electronic payments shall be made using either the ACH credit
or ACH debit method.

(d) Alternative method.--

The Tax Commissioner shall provide by rule, which may be an
existing rule, an alternative method for making same-day payments
if an electronic funds transfer fails.

(e)Due date of remittances.--

(1) If a due date for a payment falls on a Saturday, Sunday or
legal holiday, the payment, including any related payment voucher
information, is due on the next succeeding business day.

(2) If the Federal Reserve Bank is closed on a due date that
prohibits a person from being able to make a payment by ACH debit
or credit, the payment shall be accepted as timely if made on the
next day the Federal Reserve Bank is open.

(e)(f)Format of data accompanying remittance.--

Any data that accompanies a remittance shall be formatted
using uniform tax type and payment type codes approved by the
governing board.

(1) The Tax Commissioner shall provide a monetary allowance to
a certified service provider in Model I. This allowance shall be in
accordance with the terms of the contract between the governing
board of the Streamlined Sales and Use Tax Agreement and the
certified service provider. The details of this monetary allowance
shall be developed and provided through the contract process. The
contract shall provide that the allowance be funded entirely from
money collected in Model I.

(2) The contract between the governing board and the certified
service provider may base the monetary allowance to a certified
service provider on one or more of the following:

(A) A base rate that applies to taxable transactions processed
by the certified service provider; or

(B) For a period not to exceed twenty-four months following a
voluntary seller's registration through the agreement's central
registration process, a percentage of tax revenue generated for a
member state by the voluntary seller for each member state for
which the seller does not have a requirement to register to collect
the tax.

(b) Monetary allowance for Model II sellers.--

The monetary allowance to sellers under Model II may be based
on the following:

(1) All sellers shall receive a base rate for a period not to
exceed twenty-four months following the commencement of
participation by a seller. The base rate is set by the governing
board of the Streamlined Sales and Use Tax Agreement after the base
rate has been established for Model I certified service providers.
This allowance is in addition to any vendor or seller discount
afforded by each member state at the time.

(2) A voluntary Model II seller not otherwise required to
register with this state to collect the consumers sales and service
tax and use tax, that registers through the Streamlined Sales and
Use Tax Agreement's central registration process, shall receive for
a period not to exceed twenty-four months following the voluntary
seller's registration, the base rate percentage of tax revenue
generated for this state by the voluntary seller.

(3) Following the conclusion of the twenty-four-month period,
a seller will only be entitled to a vendor discount afforded under
each member state's law at the time the base rate expires.

(c) Monetary allowance for Model III sellers and all other
sellers that are not under Model I or II.

A monetary allowance to sellers under Model III and to all
other sellers registered under the agreement that are not sellers
under Model I or II may be allowed based on the following:

(1) For a period not to exceed twenty-four months following a
voluntary seller's registration through the agreement's central
registration process, a percentage of tax revenue generated for a
member state by the voluntary seller for each member state for
which the seller does not have a requirement to register to collect
the tax; and

(2) Vendor discounts afforded under each member state's law.

(d)(c)Prohibition on allowance or payment of monetary
allowances.--

Notwithstanding subsections (a), (b) and (c) of this section,
the Tax Commissioner may not allow any vendor, seller or certified
service provider any monetary allowance, discount or other
compensation for collecting and remitting the taxes levied by
articles fifteen and fifteen-a of this chapter, or for making and
filing the periodic reports required by this article, or articles
fifteen and fifteen-a of this chapter, until the cost of collection
study required by the agreement is completed and the monetary
allowances are based on the results of that study, or on
requirements of federal law requiring remote sellers to collect
sales and use taxes for states that have signed the agreement.

§11-15B-32. Effective date.

(a) The provisions of this article, as amended or added during
the regular legislative session in the year 2003, shall take effect
January 1, 2004, and apply to all sales made on or after that date
and to all returns and payments due on or after that day, except as
otherwise expressly provided in section five of this article.

(b) The provisions of this article, as amended or added during
the second extraordinary legislative session in the year 2003,
shall take effect January 1, 2004, and apply to all sales made on
or after that date.

(c) The provisions of this article, as amended or added by act
of the Legislature in the year 2004 shall apply to all sales made
on or after the date of passage in the year 2004.

(d) The provisions of this article, as amended or added during
the regular legislative session in the year 2008, shall apply to
all sales made on or after the date of passage and to all returns
and payments due on or after that day, except as otherwise
expressly provided in this article.

(e) The provisions of this article, as amended or added during
the 2009 regular legislative session, shall apply to all sales made
on or after the date of passage and to all returns and payments due
on or after that day, except as otherwise expressly provided in
this article.

(f) The provisions of this article, as amended or added during
the 2010 regular legislative session, shall apply to all sales made
on or after the date of passage and to all returns and payments due
on or after that day, except as otherwise expressly provided in
this article.

(g) The provisions of this article, as amended or added during
the 2012 regular legislative session, shall apply to all sales made
on or after the date of passage and to all returns and payments due
on or after that day, except as otherwise expressly provided in
this article.

§11-15B-33. State administration of local sales and use taxes.

The Tax Commissioner shall conductadminister, or authorize
others to conduct on his or her behalf, the sales and use tax laws
of this state subject to the agreement. Sellers and purchasers are
only required to register with, file returns with and remit funds
to the Tax Commissioner. The Tax Commissioner shall collect any
municipal sales and use taxes and distribute them to the
appropriate taxing jurisdictions. The Tax Commissioner shall
conduct, or others may be authorized to conduct on his or her
behalf, all audits of sellers registered under the Streamlined
Sales and Use Tax Agreementand purchasers for compliance with the
sales and use tax laws of this state and the sales and use tax laws
of its local jurisdictions. AExcept as provided herein, local
jurisdictions may not conduct independent sales or use tax audits
of sellers registered under the Streamlined Sales and Use Tax
Agreementand purchasers.

§11-15B-34. State and local sales and use tax bases.

(a) General.--The tax base of a local jurisdiction that
levies a local sales or use tax pursuant to authority granted by
the Legislature shall be identical to the sales and use tax base of
this state, unless otherwise prohibited by federal law, except as
provided in subsection (b) of this section.

(b) Exceptions.--

This section does not apply to sales or use taxes levied on:
(1) The wholesale sale of gasoline or special fuel to power motor
vehicles, aircraft, locomotives, or watercraft or to electricity,
piped natural or artificial gas or other fuels delivered by the
seller, which local jurisdictions are prohibited from taxing; or
(2) the retail sale or transfer of motor vehicles, aircraft,
watercraft, modular homes, manufactured homes or mobile homes.

_______________

(NOTE: The purpose of this bill is to update code provisions
to conform to the Streamlined Sales Tax Agreement. The bill adds
new definitions and clarifies present definitions. The bill
incorporates changes to the Streamlined Sales and Use Tax Agreement
and adds computer software maintenance contracts as a Streamlined
Sales and Use Tax Agreement. The bill also relieves a seller of
the tax liability in certain instances, eliminates monetary
allowances for certain sellers, provides new effective dates,
clarifies state administration of state and local sales and use
taxes, bases and exemptions.

Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)